The death of the mail?

Tyler Cowen links to this story outlining the Postal Service's large operating losses and proposed service changes and says that "the U.S. Postal Service is not efficient." Now, Cowen is using the term in its economic sense, but the huge losses that the service is facing will probably lead people to think that it doesn't operate efficiently in the normal sense of the word. And it's not clear to me that that's true.

This article outlining five myths about the Postal Service, which is admittedly written by the postmaster general, makes the service seem efficient. And whenever I mail something, the prices seem competitive and the speed borders on the obscene. Frankly, I still find the existence of rapid and reliable mail delivery to be baffling and an inarguable rejoinder to those who say the government can't run complicated services efficiently.

What does seem to be happening is that the Postal Service is in a dying industry, and no one quite knows how to manage the decline. E-mail has made mail (which is different than shipping) obsolete. But lots of people -- particularly older people -- still use the mail. And we as a country appear to still believe that people in rural areas should be able to get their mail. So the Postal Service has to maintain a vast mail-delivery infrastructure even as the volume business that supported that infrastructure is collapsing. Within that context, the Postal Service seems to be operating pretty efficiently, but it's trapped providing a level of service to a breadth of people that can't possibly be profitable. The result will be taxpayer-funded losses and a declining level of service that will make the Postal Service look bad even as it's not doing anything wrong, or inefficiently.

The first move seems to be that the Postal Service will end Saturday delivery. Over the next 20 or so years, I wouldn't be surprised to see that ratchet back to Monday-Wednesday-Friday. Eventually, it's hard to imagine much mail being sent at all.

I so love the USPS. I could not live without their Priority Mail service for shipping gifts and packages. I just find it more efficient and less costly than UPS or FedEx for normal package delivery. And the boxes they give you for free are so very lovely. A present sent to California from Chicago always arrives in a reliable two days, for a flat fee of less than $8 for a good sized package. Plus I like the ladies at the little post office just a block from my house.

Admittedly, letters are a thing of the past. But what you gonna do for those wedding invitations? Send e-vites? If you still get paper magazines delivered (New Yorker, anyone?), the postal service beats private delivery services for reliability any day: I've had magazines delivered both ways in various places we've lived, and the post office does a better job.

If you don't want to see the USPS wither away, USE it. Please let's not let all our delivery services go to private companies.

Argh. Why does no on ever mention legislative hamstringing of USPS? The USPS is by congressional statute obligated to pre-fund its employees' retirement to a degree that no private sector defined-benefit plan requires. That's the reason for a huge chunk of the "operating loss". In general these days USPS runs a pretty good ship. Not as good as the '90s or early '00s thanks to the decline in mail volume, but they're holding their own.

The postal service is an essential lifeline in many parts of the country where there is no high-speed Internet. People would be surprised that there are many towns in places like NY and Massachusetts with no connectivity, or even cell phone service. I recently drove for more than an hour in the Adirondacks with no cell service. There are significant numbers of towns with no phone lines. Sure, we're not talking about a large portion of the population, but still the post office allows people to live, work, and stay connected in these places.

I forgot to mention media mail. Where else can you send cartons of books for a mere pittance of a fee. My son sent all his books to New York when he moved via book rate: it would have cost a small fortune, by weight, via UPS, and they arrived quite quickly.

Yep, the USPS does a great job that won't need doing in 30 years or so. Each generation from here on out will use print less and less until high-frequency mail delivery just won't be tenable for the USPS. I agree that they'll probably scale back, though I'd guess they'd stagger delivery days like garbage service. Different areas will have delivery on different days. That allows them to service everyone with a smaller fleet.

This post isn't credible. And it isn't because I disagree with your assessment that "it's trapped providing a level of service to a breadth of people that can't possibly be profitable." I say it because you still insist that the Postal Service is efficient. You do so in two main ways: via the arguments of the postmaster general, and by saying it is efficient within a certain context.

Taking them in reverse order: to say something is efficient within the context of ridiculous burdens is silly. Let's just stop mincing words; the Postal Service does a lot of good, it gets things done, but at a huge loss. Let's not dance around the issue by making excuses.

As to postmaster general's defense: his basic argument is that the USPS is efficient because they've made a lot of cuts. That's great. But he goes on to admit that he agrees with the GAO assessment that they're in deep trouble! And while you may say that they are efficient with the exception of huge losses, I'll just quote one commenter (from this Federal Eye post:http://voices.washingtonpost.com/federal-eye/2009/07/postal_service_joins_high_risk.html) who remarked:

"Our local post office closes between 11:00 A.M. and 1:00 for lunch - effectively limiting service to those of us who would like to do our postal business at noon. When I tried to byuy 2 books of stamps at 9:10, I was told they could not make change so early in the day. No wonder more people are finding ways to avoid the postal service - they are not customer friendly, not efficient, and should be replaced by private enterprise...and no, I am not a republican."

This is not unusual. Many people share frustration about USPS's hours, long lines, etc.

I could go on, but I really don't think you need to be spending your time defending USPS. And from what it sounds like, John Potter seems to be asking for less federal gov't involvement - more freedom for USPS - in order to get itself out of this mess. Of course, those changes would make it much less "efficient" by your definition.

I don't like blaming it on the industry, by the way. Fedex, UPS, etc. seem to be doing well delivering mail.

I'm a huge fan of the US Postal Service. They come to my house, pick up my mail and send it anywhere in the USA for only 44 cents. 44 cents! That is just amazing. It costs 5 times that much for a freakin' cup of coffee.

I'm going to have to, although it pains me, agree with FastEddie on this one.

The one thing that bugs me about the US Postal Service is all the junk mail. I know, I know, the junk mail is not their fault. I shouldn't "kill the messenger", but junk mail is annoying. I wish their was something like the "No Call List" for mail solicitations.

Surprisingly, e-mail isn't quite as available as many might think. Several hours ago, the government issued its annual report on availability of electronic services (http://www.ntia.doc.gov/reports/2010/NTIA_internet_use_report_Feb2010.pdf), which sheds some light on the issue. There are also useful statistics and graphs at http://www.internetworldstats.com/ .

Like broadcast television, Postal mail is the ONLY option available to large, yet unacknowledged, segments of the population; further, Postal mail, like broadcast television, functions in emergencies, making it a necessity rather than an option.

None of this changes the fact that the Postal company is going broke almost as fast as is Medicare and the Federal government in general: it's refreshing to see the Postmaster taking on the issue before it becomes more of a crisis.

I love Fedex, in my youth I was a courier for Fedex and I have nothing but positive things to say about both the company and the people that work there. But if you offer them 44 cents an envelope they will laugh at you.

I'd like to see an option where we could insert a poll into a comment (no external links) to ask people if they think the USPS is efficient or not. (Of course, I'd also like to see a system where comments can be ranked, but oh well.)

Just to be clear on my statement, what I meant at the end was that Fedex and UPS and others will still be delivering mail, that although there is far less use there will still be demand for it.

You're sort of making my point for me. It is going to need to be more expensive to deliver mail in order for it to be operating efficiently. And I don't think I am being all too controversial, given that the very postmaster general that Ezra links to is saying the same thing. They will need more flexibility. If your standard is being able to ship for 44 cents, fine - but don't tell me it is efficient to do so while simultaneously losing billions of dollars.

That was my issue with this post, why I said it wasn't credible. I don't think we should go around saying things are efficient when they hemorrhage taxpayer dollars. I also don't think USPS is all that efficient on some other measures, e.g. long lines and hours.

in many rural areas UPS and FedEx actually outsource their delivery to the USPS. You pay UPS $20 to delvier a package to East Nowhere, Oklahoma and UPS turns around and pays the Postal Service $12 to deliver the package for them. That's because it isn't economical for private delivery companies to maintain full nationwide coverage, but the USPS is statutorily required to. If we get rid of the USPS then UPS and FedEx's business models will start not making sense also.

gocowboy - Surely you admit that the USPS could double, triple, or even quadruple their per envelope charge and still be way less expensive than UPS or Fedex. To me, that seems obvious. Therefore, to say they are running at a huge loss, while true, is missleading.

As to the people who complain about the level of service they recieve at the post office I'd counter that any service that sees as much traffic as the USPS is bound to have people complain about it. Personally, I find the post office far more reliable than UPS. UPS has let me down so many times, on important business and personal matters, that I won't use them under any circumstances. That said, Fedex is hands down the best courier service in the world. But then, you get what you pay for.

Explain to me: how is it misleading? The GAO, postmaster general, etc. make reference to it. What's wrong with saying they operate at a loss?

I want to be plain: I am not calling for the end of the USPS. I personally believe that we need it (for now). But I also acknowledge that it is not efficient. Yes, there are the losses, but there are is also the business model, reduced delivery days, etc. It baffles me how we can keep saying something is efficient given the dire straits it is in, which compel it to make drastic cuts now.

And with that, I have class! I'd be happy to keep this debate going if people are interested and I'll check out this space later tonight.

gocowboy - There is nothing wrong with saying they are operating at a loss; they are. But if a company can quadruple its charge and still be, by far, the cheapest competitor in its field the problem is more about pricing then effiency. Keep in mind, I'm not saying that the USPS can't make changes in their operating structure, most large businesses/organizations need to do this from time to time to adjust to, well, the times.

Should the USPS increase its rates (especially on junk mail)? Yes. Should the USPS go from 6 days a week to 5 days a week? Yes. If they find other changes that can streamline their operations should they make those changes? Yes.

But to look at the USPS losses and judge them based on those losses is, to me, wrongheaded.

Perhaps they will scale back to mail hubs? Do you really need to-your-door delivery?

I mean honestly, almost all the mail I get is either junk mail or bills that I'd rather not receive in paper form anyways. Given a few more years for my generation (approaching 30) and younger to take up more of the demographics, and it will be so rare to actually get a letter by mail that you could probably get away with delivering it to a semi-local post office and just making me come pick it up.

It is remarkable how well the USPS does with such a huge bureauacracy. Most door to door mailmen/women are beloved members of a community. I don't want to image a day when we no longer have mail delivery. It is such a gift to get a handwritten letter or card delivered right to your home.

My understanding from hanging out with some guys in the letter carriers union was that a lot of the losses stem from Congress--at the behest of the bulk mail industry--mandating far below-cost bulk mail rates on USPS.

So, the 44 cents for regular postage, as cheap as that is, is actually profitable. Maybe the parcels too. It's the junk mail that's the problem.

Now, take that with a grain of salt, because I haven't verified it, but it wouldn't surprise me much. I wonder if the reference to "losing money" is a reference to that as well as the pension issue.

"So the Postal Service has to maintain a vast mail-delivery infrastructure even as the volume business that supported that infrastructure is collapsing."

Only if every resident of the country has a right to delivery of the mail at their front door 6 days a week. Tweak the "at their front door" and "6 days a week" and you can have a dandy postal system that doesn't bleed red ink year after year.

Ahem. Not unlike "every resident of the country has a right to low copays, low deductibles, low out of pocket, preventitive care, prescription drug coverage, and no annual or lifetime caps" vs. "we will subsidize major medical care for all Americans so they don't go bankrupt or die". :)

well well, resident socialist ezra klein tries to explain away we shouldnt be afraid of government health care when the postal service is going bankrupt and the government run health care we have so far is...going bankrupt!

jesus christ, these lefties are hell bent on proving their ideas toxic to the well being of the country instead of merely taking history's word for it.

its embarrassing we have fallen for this lot and let their ideas gain any credibility in our own minds.

I think you mean "Congress forces the Postal Service to maintain..." The fix would be simple, shut down the 3000 POs that USPS suggested, open up the employment contract to other unions, free labor, and contractors. Also, we would see the price of stamp rise to the level of its cost, which would be a good thing.

I would particularly appreciate it if they would stop the delivery of hundreds of pounds of trash that go straight into the recycling, trash, or shredder every year- trash which I then have to pay to have taken away.

I think you have to be fair and acknowledge I built my argument on more than that. It wasn't just pricing, it is also many of the things you mentioned that will be needed changes, and fundamentally the notion that comes out of the article you read: their business model is extremely flawed. There are problems all over the place. The losses themselves aren't the problem, they're a symptom of the disease. It seems odd to me that you won't judge them by their losses but do acknowledge they need to make major fixes.

There are many ways the postal service could thrive well into the next century, but they can't do it based on physical delivery of mail. Unfortunately, they are extremely unwilling to change. This I know from personal experience.

Ten (!) years ago, I was involved with a company that wanted to partner with the USPS to make guaranteed electronic delivery of documents directly from copy machines. Instead of copying or printing documents to paper, and then physically moving them to the recipients, you'd print or copy and electronically deliver it.

The technology was pretty simple, even at the time, and now is trivial. What stopped us was the USPS brass, who nixed anything that didn't involve physical delivery. It was a very short-sighted decision. Robust, guaranteed-delivery electronic mail is still something we could really use, and it would be tremendously profitable.

Email and other forms of electronic messaging are the natural evolution of physical mail. There's a reason why Gmail, Yahoo Mail, and Hotmail all have sprung up: the USPS left a vacuum in *message* delivery by stubbornly focusing on *physical* delivery.

I was there, and can tell you that the USPS was given plenty of opportunities to migrate to an electronic platform, and either turned them down outright, or tried small pilot projects, and gave up.

I hate to say they deserve to die out, because universal communication is a wonderful thing. But the USPS may just be too hide-bound to be the organization that delivers it.

Actualy the postal service has the worst aspects of both the private sector and the government run sector. They were removed from direct government control years ago and therefore get no direct government subsidies but they operate under the heavy hand of government control for all aspects of their operation. The postal service can't raise the price of their service, change any aspect of their operation (delivery times, days etc.), has to prepay their over priced government mandated pensions, they have to deliver to every address in the country 6 days a week and they are heavily unionized. In other words they are expected to make a profit like a private company with no government subsidies but all aspects of their operation are controlled by the government to the point where they have to get congressional permission to change the days they deliver mail. No wonder they almost always lose money. On top of all these problems the postal workers themselves have a government worker mentality that is in no way customer oriented. Going to the post office to mail a package is similar to going to the DMV to get your driver license: the workers are surly, unhelpful, and constantly go on breaks no matter how long the lines. I once had a postal worker close the gate on me as I approached the counter to mail a package even though it was still a couple of minutes before closing. The post offices are not open at convient hours for people who work for a living and you can't buy stamps or any other postal products after their very limited hours. I never use the post office any more. I prefer my local private mail service, Going Postal, who are always friendly and are open 7 days a week late into the afternoon. A lot of the postal service problems are self inflicted.

This is incredibly silly. The point Ezra made is that the Post Office is not a business. It's a service. The Post Office wasn't designed to make money. If it were, it would cut out probably two-thirds of the areas it services. That's probably the best way for it to increase efficiency. But if it did so, it would be abdicating its responsibilities to those it serves.

"Many people share frustration about USPS's hours, long lines, etc."

Also silly. Increasing hours and postal workers means increasing costs. Nothing to do with efficiency. If you want to claim that the Post Office doesn't serve you as you'd like, then make that claim. But that doesn't mean it's inefficient. That means you don't like it. Two different things.

"Going to the post office to mail a package is similar to going to the DMV to get your driver license: the workers are surly, unhelpful, and constantly go on breaks no matter how long the lines."

My postal people are incredibly friendly and customer-oriented. As are my DMV people.

Now that I think about it, a lot of the government workers I've interacted with have been kind and helpful. I visited all three of my US Representatives' Offices recently and spoke at length with some of the front desk staff. All were thoughtful, attentive, and intelligent. Which is more than I can say for the employees of the ISP company I dealt with last time my internet went down for hours. Those people were useless to me. And since there aren't a lot of options for internet providers, not much to be done about them. I certainly can't vote them out.

quant is right. Private carriers like FedEx and UPS give a lot of their rural mail (and some residential) to USPS for final delivery. Private carriers would have to build out their infrastructure to handle local pickup, or drop coverage of some rural areas. This would likely drive up their costs (and note that UPS profits were down 50% last year-- not sure about FedEx). Finally, the USPS works closely with the FBI and CIA to monitor/regulate mail and make sure harmful/illegal substances go through the mail. Doing this to the same extent with private carriers would require more investment.

My postal workers are all right. My DMV people are unhelpful and surly, but they work in a structure that's idiotic and was probably determined by bureaucrats who never worked a day in the front line at a DMV, so I can't say that I blame them much.

Although, in keeping with Slag's "can't vote out my ISP" comments, I can't vote out the folks at the DMV or the Post Office, either. And I have no choice, at any price, when it comes to the DMV. That's where I have to go to renew my license. I've got a choice of, like, 6 Internet providers. Comcast and AT&T being the main ones, yes. But there's also Earthlink. Locally, we have an outfit called WorldSpice. A place called Freedom Communications. Another place called CenturyLink. Charter and Speakeasy.

Turns out, after much investigation, that government bureaucracy and corporate bureaucracies are filled with flesh-and-blood people that have the same failings, no matter where they are.

'Frankly, I still find the existence of rapid and reliable mail delivery to be baffling and an inarguable rejoinder to those who say the government can't run complicated services efficiently.'

That says everythingyou need to know about Ezra Klein. He thinks that the US Post Office is the best counter-proof to those who argue that the government (with its perverse incentives) is incapable of providing a service efficiently. Even Klein's messiah (Barry O.) compared the Post Office unfavorable with Fed Ex and UPS.

By the way, Ezra - regardless of whether or not package delivery is different than mail service - don't you find it interesting that the Post Office fails miserably in its efforts to compete in the one area where it doesn't have a government-mandated monopoly?

I'd love to hear your definition of efficiency. You're basically saying that the lines, hours, and all the rest that frustrate people are not a sign of inefficiency. They're a sign of high costs. Franky, not one person in this comments section has explained what it means to be efficient. They're just saying, it seems, that USPS can make all of these deliveries for such a low price and they get the job done, so they're efficient! I'm saying, that it has to lose tons and tons of taxpayer dollars to do so, and is now being forced to change how it operates (it's business model, by the way, in case you didn't catch it), and these are all signs of inefficiency.

Reading your comment, you seem to unintentionally acknowledge inefficiency by saying that USPS could cut service to increase efficiency. Right there, you're saying that efficiency can be measured by costs. Maybe you didn't mean it. Anyway, I think it proves my point.

Let me once again emphasize that I am not anti-USPS. I think it is an example of a government entity that should remain in place, despite losses. My one and only quarrel with this piece is the claim that USPS is efficient. I think not.

"'I'd love to hear your definition of efficiency."
My definition of efficiency is pretty similar to a lot of people's: the ratio of effort to output. For instance, it takes a lot of effort to deliver a piece of mail to one house in Podunk, Missouri, compared to delivering that same piece of mail to one house in Manhattan, New York (based on my understanding of the laws of physics...specifically, the space-time continuum, among others). But the output--a piece of delivered mail--remains the same. So, delivering mail to Podunk is less efficient than delivering mail to Manhattan.

"You're basically saying that the lines, hours, and all the rest that frustrate people are not a sign of inefficiency. They're a sign of high costs."
I didn't say they were a sign of high costs. I said it would probably cost more to shorten lines and increase post office hours. But you're right, I misspoke. I should have said that these things have nothing to do with *increasing* efficiency. Monetary cost is one measure of effort (but certainly not the only one). So, if we're using monetary cost as a measure, then you're correct, increasing hours and decreasing lines does have something to do with efficiency...they decrease efficiency.

It's interesting. USPS can increase hours, and also increase costs. On the other hand, they could decrease costs by decreasing hours, perhaps (you'd have to see what it does to their business). Either way, they're in a real muck. Now, do they get a lot output? Yup. But at what cost to taxpayers? I suppose the fundamental issue though is whether we can get a measurement of USPS's efficiency. We say they're efficient, it seems, because everyone is so taken with their ability to deliver mail across the country as they do. But - and here's where we get into the semantics argument that started this - to call it efficient to do so while losing money, well, I'm not with you there.